Does a balance transfer actually save money?
Moving $6,000 at 24% to a 0% card for 18 months with a 3% fee saves $1,377 at $325 a month, with $330 still owed when the promo ends.
The worked example
A $6,000 card balance at 24% APR, paid at $325 a month, either left where it is or moved to a card at 0% for 18 months with a 3% transfer fee. After the promo the rate is 24%. Below that, the same transfer paid at $200 a month.
| You put in | |
|---|---|
| Balance | $6,000 |
| Current APR | 24% |
| Promo | 0% for 18 months |
| Transfer fee | 3% |
| Monthly payment | $325 |
| APR after the promo | 24% |
| Staying put | |
| Staying put: time to pay off | 24 months (about 2 years) |
| Staying put: interest | $1,564 |
| Transferring | |
| Transfer fee in dollars | $180 |
| Owed on the new card on day one | $6,180 |
| Paid off during the promo | $5,850 |
| Owed when the promo ends | $330 |
| Interest after the promo | $7 |
| Transferring: time to pay off | 20 months (about 1.7 years) |
| Saved by transferring | $1,377 |
| Payment that clears it inside the promo | $344 |
| At $200 a month instead | |
| Owed when the promo ends at the lower payment | $2,580 |
| Interest after the promo at the lower payment | $434 |
| Time to pay off at the lower payment | 34 months (about 2.8 years) |
Every figure on this page is computed from these inputs by the same calculator the channel’s Shorts use.
Run your own numbers
The calculator starts at the worked example. Change any figure to see yours.
Saved by transferring
$1,377
Staying put: interest
$1,564
Transfer: fee + interest
$187
Left owing when the promo ends: $330. Paid off in 20 months (about 1.7 years) after transferring, against 24 months (about 2 years) staying put.
Educational content, not financial advice.
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Your next moves
Read your offer’s three terms
The promo length, the transfer fee and the rate after the promo. Put them in the calculator above.
Size the payment to the deadline
The balance plus the fee, divided by the promo months: at least $344 a month in this example.
How the math works
A balance transfer swaps interest for a fee. Staying put, the card charges 24% on what you owe every month; at $325 a month that adds up to $1,564 of interest over 24 months. Moving it, you pay 3% up front, $180, which is added to the balance, and then 0% for 18 months.
During the promo every dollar of the payment comes off the balance: 18 months at $325 pays off $5,850 of the $6,180. The $330 left goes back to a normal rate, 24% here, and costs $7 more before it is gone. Counting the fee and that interest, the transfer saves $1,377.
The promo cliff
The mistake people make is reading 0% for 18 months as 0% until the balance is paid. It is a deadline. At $200 a month instead of $325, $2,580 is still owed when the promo ends, and it costs $434 of interest at 24% over the 16 months it then takes to clear.
The fee is the other part people skip. It is charged on day one and added to what you owe, so you start the promo owing $6,180, not $6,000. On many cards a late payment can also end the promo early, and the penalty APR page shows what that costs.
How to read the result
Read the balance left when the promo ends before the saving. To clear everything in time, the payment has to be the balance plus the fee divided by the promo months: at least $344 a month here. Anything less leaves a balance that meets the regular rate.
Then check the saving against the fee. If the saving is small or negative, the fee is eating most of the benefit, and paying more on the card you already have may do nearly as well. The calculator above is set to this example: change the payment, the fee and the promo length to match your offer.
Questions
Is a balance transfer worth the fee?
It is when the interest it avoids is bigger than the fee. Here the 3% fee is $180, and transferring saves $1,377 because the $325 payment clears most of the balance inside the promo.
What happens when a balance transfer promo ends?
Whatever is still owed starts collecting interest at the card’s regular rate. At $325 a month, $330 is left and costs $7; at $200 a month, $2,580 is left and costs $434.
How much should I pay each month on a balance transfer?
Enough to clear the balance plus the fee before the promo ends: $6,180 over 18 months takes at least $344 a month.
Can a balance transfer promo end early?
On many cards, yes: a late payment can end the promotional rate and can trigger a penalty APR as well. Automatic payments of at least the minimum guard against it.
Interest compounds monthly at APR ÷ 12 and each payment lands at the end of the month, after that month’s interest. The transfer fee is added to the balance on day one. Interest is 0% during the promo and the post-promo APR after it. Disclaimer